With more and more people purchasing portable handheld devices, tablet ad spend is predicted to pummel smartphone ad budgets over the next four years. According to eMarketer, the 2012 mobile ad budget made up a minuscule slice of the digital ad spend and an even tinier 2 percent of total ad money spent — but how a brand’s specific mobile budget will be allocated across mobile phones and tablets is yet to be determined.

To put things in perspective, IDC predicts that what started out as a $2.1 billion industry in 2011 will grow to an impressive $14.8 billion industry in 2016. But the devices getting the most money will change. While mobile phones will still dominate, tablet and eReader budgets will rise much faster.

Earlier this month, Marin Software released a report indicating that tablets will drive 20% of Google’s paid search ad clicks in the US by December 2013, up from 10.7% in December 2012. Fueled by consumers’ increasing use of tablets to make purchases and research goods and services online, Marin predicts the conversion rate of search ads originating from tablets will eclipse those of desktops before year end.

This accelerated growth for tablet advertising is due to several factors.

“The tablet share of the installed base of mobile devices will grow a lot, and also, per device, there is more traffic on tablets than on smartphones simply because they are easier to use,” Karsten Weide, IDC’s program VP of digital media and entertainment, told Adotas. Taken together, that means there will be a lot more traffic going through tablets than today, and traffic translates into ad inventory that publishers can sell.

Lastly, the size difference provides the much-needed real-estate brands crave. Advertisers can simply do more with the additional space, and good ads allow consumers to engage more deeply with the ads.

Challenges Facing Tablet Advertising

Although the screen size and greater functionality provide exciting opportunities, advertisers are still facing major challenges when advertising on tablets.

Getting the Budget: Even though tablets are rapidly rising in popularity — Gartner predicted that 655 million units will make it into users’ hands by 2016 — brands and advertisers still think of advertising on the device as an afterthought. Mojiva Tab, the company’s tablet network, reported that it has witnessed a 20-fold increase in tablet ad requests in the last 20 months with 2.13 billion tablet ad requests per month as of August.

Calculating an Ad’s Reach: When ad shops are trying to convince brands to invest in digital advertising, clients usually want to see statistics for the advertisements’ potential reach. Unfortunately, those numbers are extremely difficult to find. “Publishers are a bit cagey in disclosing tablet readership — plus there’s no third-party verification that I’m aware of,” said Jeremy Lockhorn, VP of emerging media and advanced media solutions at Razorfish.

Premium Supply is Essential: Many publishers are still slow when it comes to building a mobile-optimized site, let alone a tablet-optimized site or application. Publishers need to prioritize their mobile strategies to include both tablet and smartphone experiences for users; only then will they fully harness the monetization opportunities that are available to them.

Tablets Are Not Phones: Not all second-screen experiences are created equal. Sure, phones and tablets are both “mobile,” but screen size and functionality should lend themselves to different user experiences. One challenge is understanding and educating how tablets are different from phones and building creative around the inherent benefits of each device.

The ads need to be more of a streamlined experience: Interstitials, forced slideshows and auto-starting videos may drive page views and impressions, but they can create awkward and disruptive user experiences. Recently I encountered a takeover ad open within a web window inside of Twitter, which rendered the ad impossible to close.

“While the rise of tablets is no secret, what’s interesting is tablet users are engaging with search ads and converting in ways that closely resemble desktop usage,” said Matt Lawson, Vice President of Marketing and Partnerships at Marin Software. “Solid user engagement combined with favorable performance characteristics make ads on tablets hard to resist for advertisers.”

Subscribe to the free Adotas.com Newsletter

Richard L. Tso is a reporter for Adotas and an avid writer covering the intersection of technology and advertising, fashion and music. With over 12 years of experience in the Advertising, Marketing and Public Relations industries, Richard has held executive positions at global agencies and technology companies and is founder of the interactive communications firm Pseudosound Consulting LLC. A classical cellist and painter, he believes that sometimes sound carries more weight than words. He is a graduate of Stanford University.